Siemens to Buy Rail Firm for $2.9 Billion

Stefan Sauer/European Pressphoto AgencyA high speed train made by Siemens at a harbor in Sassnitz-Mukran, Germany, in 2009.

LONDON – Siemens, the largest diversified industrial group in Germany, has agreed to buy the rail signaling business of the British company Invensys for 2.2 billion euros, or $2.9 billion.

Under the terms of the deal announced late on Wednesday, Siemens said it was acquiring Invensys Rail, the signaling systems unit of the British company, in an effort to expand its market share in the rail automation sector.

“With the addition of Invensys Rail, we are in an excellent position to offer best-in-class solutions and technology to rail operators worldwide,” Sami Atiya, head of Siemens’s mobility and logistics division, said in a statement.

Invensys, an engineering and technology company, said it would return £625 million ($1 billion) from the deal to investors. Shares in Invensys rose 10 percent in morning trading in London on Thursday.

Siemens, whose stock price increased by less than 1 percent on Thursday, said that by 2018 it expected to achieve total cost savings of about 100 million euros related to the acquisition. It plans to combine the Invensys rail signaling unit, which has annual revenue of about £800 million, with Siemens’s rail automation division, according to a company statement.

Siemens also said it planned to sell its baggage handling, postal and parcel sorting units. The divisions have combined revenue of about 900 million euros.

The deal for Invensys Rail is expected to close in the second quarter of 2013.

JPMorgan Chase, Ondra Partners and the law firm Freshfields Bruckhaus Deringer advised Invensys on the deal.